Wireless carriers unveil new iPhone installment-plan prices

By Scott Moritz

Bloomberg News

Posted:
09/13/2013 03:12:57 PM PDT

Updated:
09/13/2013 03:36:26 PM PDT

CUPERTINO, CA - SEPTEMBER 10: The new iPhone 5C is displayed during an Apple product announcement at the Apple campus on September 10, 2013 in Cupertino, California. The company launched the new iPhone 5C model that will run iOS 7 is made from hard-coated polycarbonate and comes in various colors and the iPhone 5S that features fingerprint recognition security. (Photo by Justin Sullivan/Getty Images)
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Justin Sullivan
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T-Mobile US, AT&T and Verizon Wireless, touting their new installment-plan approach to mobile-phone pricing, will offer Apple Inc.'s (AAPL) iPhone 5C without an initial down payment.

T-Mobile will subsequently require 24 months of $22 payments, the Bellevue, Wash.-based company said on its website. AT&T's $22 installment plan will only last 20 months, though its service prices start at a higher rate. And Verizon is offering the 5C without a down payment and $22.91 per month over 24 months, according to its website.

The debut of the new iPhones, due in stores later this month, is putting a spotlight on the industry's shift toward more flexible installment purchases, as an alternative to the subsidized $200 phone, with a 2-year contract . T-Mobile, the fourth-largest U.S. carrier, was first to adopt the approach earlier this year, seeking to stand out from its larger rivals. Verizon Wireless and AT&T then followed with similar plans.

"I think these plans are here to stay," said Jennifer Fritzsche, an analyst at Wells Fargo & Co. in Chicago. "It's very good for the carriers since it decreases their subsidy costs and takes some pressure off their hardware expenses."

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While T-Mobile no longer offers discounted phones tied to contracts, the other major carriers still offer the traditional method of subsidizing phones in exchange for two-year service plans.

The higher-end iPhone 5S will sell for $99 down and $22.91 a month at T-Mobile, while AT&T will offer it for zero down and 20 monthly payments of $27. Verizon hasn't determined an installment plan price for the 5S yet. Verizon and AT&T will offer the iPhone 5S starting at $199 with a two-year contract.

While the total cost of buying the iPhone through AT&T, for example, is lower, T-Mobile aims to attract customers with its service plans. The company charges $70 a month for unlimited calling, text and data. AT&T, which no longer offers unlimited data, has a starting price of $80 a month, with caps on calling minutes and data.

"This represents a significant moment for people to rethink who their carrier is and switch to T-Mobile," said T- Mobile Chief Marketing Officer Mike Sievert. "People have been waiting, either because they are stuck in contracts, or waiting for the new iPhone."

Sprint, the third-largest U.S. carrier, will offer both handsets starting Sept. 20 on a two-year service agreement. The cheapest model 5C will sell for $99.99 while the 5S will start at $199.99, the Overland Park, Kansas-based company said in a statement.